Last update on 2024-06-07

Bureau Veritas (4BV.F) - Piotroski F-Score Analysis for Year 2023 (Final Score: 7/9)

Bureau Veritas (4BV.F) Piotroski F-Score analysis reveals a 7/9 score for 2023, reflecting financial strength in profitability, liquidity, and operating efficiency.

Short Analysis - Piotroski Score: 7

We're running Bureau Veritas (4BV.F) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Bureau Veritas (4BV.F) has a high Piotroski Score of 7, indicating a strong financial position. The analysis looked at nine criteria linked to profitability, liquidity, and operating efficiency. Notable highlights are positive net income, a high operating cash flow, increased return on assets (ROA), and a rising current ratio. However, there are concerns about increased leverage and diluted shares. Overall, the company's financial health appears solid with strengths in profit generation and liquidity, despite some leverage risks.

Insights for Value Investors Seeking Stable Income

Given Bureau Veritas's high Piotroski Score of 7, it stands out as a potentially strong and undervalued investment. The company has demonstrated consistent profitability, efficient asset management, and robust cash flow. While there are minor concerns regarding increased leverage and share dilution, these factors do not significantly overshadow the positives. Therefore, it may be worthwhile for investors to consider this stock, particularly those looking for firms with solid financial health and growth potential.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Bureau Veritas (4BV.F)

Company has a positive net income?

Net income is a key measure of a company's profitability, and positive net income signifies profit generation.

For Bureau Veritas (4BV.F), the net income for 2023 stands at 503.7 million, which is indeed positive. Over the last two decades, Bureau Veritas has shown a generally positive trend in net income, with some fluctuations. The last five years, in particular, have seen net income values of 125.3 million (2020), 420.9 million (2021), 466.7 million (2022), and 503.7 million (2023). This represents a substantial recovery and growth trend post-2020, which can be considered a positive indicator. Therefore, for the Piotroski F-Score, Bureau Veritas earns 1 point for positive net income in 2023.

Company has a positive cash flow?

Check if CFO is positive or negative. If positive, it indicates good financial health and added 1 point; otherwise, 0 points.

For the fiscal year 2023, Bureau Veritas (4BV.F) has reported a Cash Flow from Operations (CFO) of €819.7 million, which is indeed positive. This indicates robust operational cash generation capabilities and sound financial health for the company. Separated by 65.04% over a span of 20 years, Bureau Veritas has maintained a consistent upward trajectory in its CFO, starting from €127.4 million in 2003 to the current figures. This positive trend signifies strong operational efficiency and effective cash management over the years. As a result, they earn 1 point in the Piotroski Analysis for this criterion.

Return on Assets (ROA) are growing?

The Change in Return on Assets (ROA) criterion measures changes in a company's ROA from one year to the next. It is important as it indicates if the company's effectiveness in using its assets to generate earnings is improving.

In 2023, Bureau Veritas (4BV.F) experienced an increase in its ROA from 0.0673 in 2022 to 0.0732 in 2023. This positive change is notable; it indicates improved efficiency in utilizing its assets to generate profits. Therefore, according to the Piotroski analysis criteria, we attribute 1 point for this increase. Notably, this growth contrasts with the industry median ROA, which generally trends higher but has seen fluctuations over the past 20 years.

Operating Cashflow are higher than Netincome?

This criterion compares Operating Cash Flow to Net Income, signaling if profits are backed by actual cash flow.

For Bureau Veritas (4BV.F), the Operating Cash Flow for 2023 is €819.7 million, while the Net Income stands at €503.7 million. Since the Operating Cash Flow significantly exceeds the Net Income, we add 1 point to the Piotroski F-score. This trend is positive, suggesting that Bureau Veritas's reported earnings are underpinned by strong actual cash flow. A high Operating Cash Flow compared to Net Income is often seen as a reliability indicator of the earnings, implying low earnings manipulation. Historical data further supports this trend, consistently showing robust Operating Cash Flows of €700 million or more annually since 2014, reflecting the firm's stable cash-generating ability.

Liquidity of Bureau Veritas (4BV.F)

Leverage is declining?

Leverage measures a company's debt level relative to its equity. High leverage means higher risk.

Between 2022 and 2023, Bureau Veritas’ leverage increased from 0.3386 to 0.3611. This rise in leverage suggests the firm took on more debt or equity decreased, which might be concerning amid risk assessments. Over the past 20 years, Bureau Veritas’ leverage was highest in 2019 at 0.4603 and lowest in 2003 at 0.0681. Recent upticks imply rising financial leverage which might concern investors.

Current Ratio is growing?

The current ratio measures a company's ability to pay its short-term obligations with its short-term assets.

In 2023, Bureau Veritas (4BV.F) has a Current Ratio of 1.6716, up from 1.5116 in 2022, an increase of approximately 10.6%. This positive trend indicates an improving liquidity position, showing that Bureau Veritas is better positioned to meet its short-term liabilities. This trend aligns over 20 years, showing a general improvement in liquidity. In comparison, the industry's median current ratio has been fluctuating, concluding at 1.2211 in 2023. Hence, Bureau Veritas outperforms the industry benchmark, emphasizing robust financial health.

Number of shares not diluted?

Shares outstanding represent a company's stock currently held by all its shareholders, including share blocks held by institutional investors and restricted shares owned by the company's officers and insiders. Monitoring changes in the number of shares outstanding over time is crucial as it can indicate movements in ownership, capital structure adjustments, and management's strategic decisions.

The outstanding shares for Bureau Veritas (4BV.F) have increased from 452,140,348 in 2022 to 453,009,724 in 2023. This represents an increment of 869,376 shares. Over the past 20 years, the trend in outstanding shares has generally increased with fluctuations. From 2003 to 2023, the shares outstanding climbed from 0 to over 453 million. This trend might suggest a consistent issuance of shares, possibly for raising capital, expanding operations, or other financial strategies. The increase in 2023 would warrant a score of 0 for this criterion as per the Piotroski analysis.

Operating of Bureau Veritas (4BV.F)

Cross Margin is growing?

Change in Gross Margin compares the efficiency and profitability of the company's core activities relative to its peers and across time periods.

Bureau Veritas (4BV.F) witnessed a minor increase in its Gross Margin from 0.7132 in 2022 to 0.7201 in 2023. This denotes a positive trend, adding 1 point to its Piotroski Score. Over the last two decades, Bureau Veritas's Gross Margin consistently remained above the industry median. For instance, in 2023, its Gross Margin stands at 0.7201 compared to the industry median of 0.5565. This long-term trend of outperforming the industry median underscores Bureau Veritas's operational efficiency and superior profitability. The slight year-on-year increment, therefore, reinforces its strong market position and implies continued operational optimizations. Thus, this trend is positively reflected in this Piotroski criterion.

Asset Turnover Ratio is growing?

Asset Turnover measures a company's efficiency in using its assets to generate revenue. It is calculated by dividing sales by total assets.

For Bureau Veritas in 2023, the Asset Turnover increased to 0.8527 from 0.8147 in 2022. This improvement suggests better efficiency in utilizing assets to produce revenue. An increase in this ratio by approximately 4.67% is a positive indicator, adding 1 point to the Piotroski score. Also, compared to the trend over the last 20 years, this figure is above the lower averages seen in recent history, especially the post-2012 dip where the ratios hovered significantly lower.